November fuel price update

Pump prices under pressure to reach new lows

Average petrol pump prices have moved to within 2p of the six-year low recorded earlier this year, and may fall even below that before Christmas, according to the latest AA Fuel Price Report.

Diesel, which would normally become more expensive at this time of year, has dropped to its lowest price since the end of 2009.

Over the past 10 days, the wholesale price of petrol has fallen by more than 2p a litre although that has yet to be reflected in the average UK price.

Petrol price profile:

current average: 108.01p a litre

average last month: 109.21p a litre

lowest price this year (1 Feb): 106.39p a litre

average a year ago: 122.86p a litre

Diesel price profile:

current average: 110.24p a litre

average last month: 110.96p a litre

lowest since 30 December 2009, when it averaged 109.56p a litre

average a year ago: 127.27p a litre

The commodity price of petrol would have fallen further had refineries not been able to improve their margins, as they did during the summer. Last week, the International Energy Agency (IEA) reported a record three billion barrels of oil stockpiled globally. This pushed oil below $45 a barrel, lower than the level which allowed the UK’s average price of petrol to bottom out at 106.39p on 1 February.

However, while petrol cost $460-$470 a tonne in the commodity market in January, it cost $490-$500 through October into November – despite oil being even cheaper and the USA’s summer motoring season coming to a close. At the current $/£ exchange rate of $1.52, that $30 difference is equivalent to 1.5p at the pump.

Diesel stocks 'brimming'

In contrast, diesel drivers have fared much better. They would normally expect to see pump prices increase at this time of year as the demand for heating oil, which comes from the same part of the oil barrel as diesel, takes off in the US. However, on Friday, the IEA described stocks of diesel as ‘brimming’.

Supermarket fuel pricing

At the pumps, supermarket fuel pricing, as part of the Big Four’s strategy to counter the threat of newer lower-cost rivals, continues to set them apart from other retailers. The key question then is whether petrol sales, that have persisted this summer at levels previously associated with winter, continue on that track or drop even further. This would put even greater pressure on non-supermarket fuel retailers.

Continued volatility in the market

“It would be a good start to the run-up to Christmas if petrol prices fell to a new low for the year. However, this year’s lower pump prices have failed to reinvigorate pump sales in the UK – unlike in the US. That extra American demand boosted refining margins through the summer and these remain ‘robust despite high product stocks’, according to the International Energy Agency,” says Edmund King, the AA’s president.

“Although the price of oil is back into the low $40s, a surge to $50 a barrel a fortnight ago (based on a five-month-old report from China’s central bank) illustrates the continued volatility in the market. In short, UK drivers should make the most of lower pump prices while they last.”

they (drivers) are already paying on average the equivalent of an extra 2p a litre from the Insurance Premium Tax hike that came into force on 1 November

Edmund King, the AA’s president

Chancellor’s Autumn Statement

King adds: “The greatest threat to drivers’ pockets comes from the Chancellor’s Autumn Statement on Wednesday. Relatively low fuel prices should not be used as an excuse to load more duty on to drivers. This is not only because weak fuel demand shows that drivers can’t afford it, but because they are already paying on average the equivalent of an extra 2p a litre from the Insurance Premium Tax hike that came into force on 1 November.

Tackling the cracks in local roads

“Drivers will also be looking to see how the billions of pounds from fuel duty are spent – particularly in tackling the cracks in local roads, which seem to be popping up even before a cold front sets in, and the puddles, pools and ponds that have plagued roads in recent days.”

National and Regional

Across the UK, petrol is most expensive in London, averaging 108.4p a litre, and cheapest in Northern Ireland, at 107.6p. At 110.7p a litre, Scotland is dearest for diesel while Northern Ireland’s 109.7p is the lowest average price.